National Collegiate Athletic Association v. Kizzang LLC

National Collegiate Athletic Association, Plaintiff,v.Kizzang LLC and Robert Alexander, Defendants.

ORDER

Hon.
Jane Magnus-Stinson, Chief Judge

In
March 2017, Plaintiff National Collegiate Athletic
Association (the “NCAA”) initiated this
lawsuit against Defendants Kizzang LLC
(“Kizzang”) and Robert Alexander, the
founder and owner of Kizzang, for trademark infringement,
trademark dilution, and unfair competition related to
Defendants' alleged use of the marks “FINAL
3” and “APRIL MADNESS.” On November 7,
2017, the Court denied Defendants' Motion to Dismiss and
granted the NCAA's Request for Entry of Default based on
Defendants' failure to timely answer or otherwise plead
to the Complaint. [Filing No. 73.] Then, on January
18, 2018, the Court granted the NCAA's Motion for Default
Judgment and Motion for Permanent Injunction. [Filing No.
87.] In its January 18, 2018 Order, the Court found that
this is an “exceptional case” which entitles the
NCAA to an award of its attorneys' fees, and set a
schedule related to any fee motion the NCAA should file.
[Filing No. 87.] The NCAA has filed its Motion for
Attorneys' Fees, [Filing No. 93], which is now
ripe for the Court's decision.

On
March 8, 2017, the NCAA filed its Complaint in which it
alleged that Defendants “are in the business of
marketing and providing nationwide Internet-based promotions
that award prizes for predicting the results of sporting
events, including the results of college basketball games
played by and between NCAA member schools, and in particular
games played during the NCAA's Division I Men's
Basketball Championship.” [Filing No. 1 at 5.]
It alleged that Defendants used the marks FINAL 3 and APRIL
MADNESS in connection with their Final Four-based contests
and “continue offering goods and services using the
FINAL 3 and APRIL MADNESS marks via webpages and
mobile-telephone applications….” [Filing No.
1 at 6-7.] The NCAA alleged that Kizzang has applied for
federal trademark registration for FINAL 3 and APRIL MADNESS
with the United States Patent and Trademark Office
(“USPTO”). [Filing No. 1 at 7.]

The
NCAA set forth claims for: (1) trademark infringement under
15 U.S.C. § 1114; (2) trademark infringement under 15
U.S.C. § 1125(a); (3) trademark dilution under 15 U.S.C.
§ 1125; and (4) unfair competition. [Filing No. 1 at
8-11.] The NCAA filed a Motion for Preliminary
Injunction on March 9, 2017, requesting that the Court
preliminarily enjoin Defendants from the acts set forth in
the request for relief contained in the Complaint.
[Filing No. 5.] Seven days later, the Court entered
a Stipulated Order, submitted on a motion by all parties,
ordering that: (1) “[n]either Kizzang or Alexander, nor
any of their officers, agents, servants, employees or
attorneys, or anyone acting in concert with any of them, will
use the marks FINAL 3 (or THREE) or APRIL MADNESS or any
similar marks, in connection with any basketball themed
contest, promotion or service in 2017”; (2) the
NCAA's Motion for Preliminary Injunction is withdrawn
without prejudice; and (3) “Defendants, having been
served with the Complaint, shall answer by June 15,
2017.” [Filing No. 20.] The June 15, 2017
answer deadline was later extended to July 15, 2017.
[Filing No. 28.]

The
July 15, 2017 deadline came and went without an answer or
pleading from Defendants, and on July 21, 2017, the NCAA
filed its Request for Entry of Default. [Filing No.
30.] Defendants responded to the Request for Entry of
Default on August 10, 2017, [Filing No. 36], and
filed a Motion to Dismiss or, in the alternative, to transfer
the case to the United States District Court for the District
of Nevada on August 31, 2017 - more than six weeks after the
July 15, 2017 responsive pleading deadline, [Filing No.
50; Filing No. 51].

On
November 7, 2017, the Court denied Defendants' Motion to
Dismiss as to Defendants' personal jurisdiction argument,
denied as moot the remainder of the Motion to Dismiss, and
granted the NCAA's Request for Entry of Default.
[Filing No. 73.] Shortly thereafter, the NCAA filed
a Motion for Default Judgment, [Filing No. 76], and
a Motion for Preliminary Injunction, [Filing No.
78]. The Court granted both motions on January 18, 2018,
and specifically found that the circumstances present made
this an “exceptional case” such that the NCAA is
entitled to attorneys' fees under the Lanham Act.
[Filing No. 87 at 18-19.] The NCAA then filed a
Motion for Attorneys' Fees. [Filing No. 93.]

II.

Standard
of Review

The
Lanham Act provides for the recovery of attorneys' fees
in “exceptional cases.” 15 U.S.C. § 1117(a)
(“The court in exceptional cases may award reasonable
attorney fees to the prevailing party”). The Court has
already found that this case is an “exceptional”
one, entitling the NCAA to attorneys' fees. [Filing
No. 87 at 18-19.] District courts have wide discretion
when awarding attorneys' fees under the Lanham Act.
Dobbs v. DePuy Orthopedics, Inc., 842 F.3d 1045,
1048 (7th Cir. 2016) (appellate court's review of
district court's award of attorneys' fees is
“‘highly deferential' because the district
court is in the best position to determine the reasonableness
of an award for work done on litigation in that court”)
(quoting Montanez v. Simon, 755 F.3d 547, 552-53
(7th Cir. 2014)); S Industries, Inc. v. Centra 2000,
Inc., 249 F.3d 625, 627 (7th Cir. 2001) (“Under
the Lanham Act, an award of attorneys fees is committed to
the trial court's sound discretion, ” and on
appeal, the court of appeals “review[s] a grant of
attorney fees to a prevailing defendant under the Lanham Act
only for clear error”).

The
Court “begins the fee calculation by computing a
‘lodestar': the product of the hours reasonably
expended on the case multiplied by a reasonable hourly
rate.” Montanez, 755 F.3d at 553. The lodestar
calculation produces a “presumptively reasonable fee,
” which may be adjusted based on factors not accounted
for by the award calculation. Id. (citing
Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The
movant bears the burden of proving that the requested hourly
rate is reasonable and “‘in line with those
prevailing in the community.'” Pickett v.
Sheridan Health Care Center, 664 F.3d 632, 640 (7th Cir.
2011) (quoting Blum v. Stenson, 465 U.S. 886, 895
n.11 (1984)). The best evidence is “the amount the
attorney actually bills for similar work.”
Montanez, 755 F.3d at 553 (internal quotation
omitted). A movant may also prove the reasonableness of a
requested rate with, for example, evidence of attorneys'
fee awards in previous cases and evidence of the rates of
similarly experienced attorneys performing similar work.
Id.Not all evidence should be treated equally,
however. Courts may properly discount “conclusory
affidavits from attorneys merely opining on the
reasonableness of another attorney's fee, ”
evidence “involv[ing] different markets, ” and
prior awards “based on compromises between
parties.” Id.(internal alterations and
quotations omitted). Moreover, “‘while evidence
of fee awards in prior similar cases must be considered by a
district court as evidence of an attorney's market rate,
such evidence is not the sine qua non of that
attorney's market rate - for each case may present its
own special set of circumstances and problems.'”
Pickett, 664 F.3d at 646 (quoting Uphoff v.
Elegant Bath, Ltd., 176 F.3d 399, 408 (7th Cir. 1999)).
Thus, while the Court may not ignore fee awards from other
cases, the Court is not bound by such determinations,
Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 557
(7th Cir. 1999), particularly where a fee award lacks an
“explanation as to how the court[ ] had arrived at
[particular] rates.” Pickett, 664 F.3d at 643
n.4.

Should
the plaintiff establish that the requested rates are within
the prevailing community rate, the burden shifts to the
defendant to demonstrate “a good reason why a lower
rate is essential.” Id. at 640 (internal
quotation omitted). A defendant must offer at least some
evidence to rebut a plaintiff's showing of a reasonable
hourly rate, and may do so by pointing to market data, lower
prior awards for the plaintiff's attorney, and past
awards for other comparable attorneys in the market.
Id. at 647. If the plaintiff does not meet the
burden of proving that the requested rates are appropriate,
the Court may independently determine an appropriate rate.
Montanez, 755 F.3d at 553.

“The
Supreme Court has consistently held that the interest in
uniformity of fee awards is not great enough to justify
closer appellate scrutiny - indeed, the Court has said that
there is hardly any ‘sphere of judicial decisionmaking
in which appellate micromanagement has less to recommend
it.'” Id. (quoting Fox v. Vice,
563 U.S. 826, 838 (2011)). “[T]rial courts need not,
and indeed should not, become green-eyeshade
accountants.” Fox, 563 U.S. at 838. Rather,
“[t]he essential goal…is to do rough
justice” and to avoid allowing the fee determination to
“result in a second major litigation.”
Id. (internal quotation omitted).

III.

Discussion

In
support of its Motion for Attorneys' Fees, the NCAA
argues that it has incurred $242, 213.55 in attorneys'
fees, and that those fees are reasonable in light of the
history of this case. [Filing No. 94 at
2-4.][2] The NCAA argues that each attorney that
worked on the case expended a reasonable amount of time, and
that their rates were reasonable. [Filing No. 94 at
5-8.] It also notes that some of the attorneys have been
representing the NCAA as litigation counsel for many years,
and have “developed efficiencies in [their] practice
due to [their] familiarity with the NCAA's intellectual
property rights, as well as [their] relationships with the
NCAA's in-house counsel and other key personnel.”
[Filing No. 94 at 6.] The NCAA contends that local
counsel and several paralegals spent a reasonable amount of
time on this case, and that their rates are reasonable.
[Filing No. 94 at 7-8.] Finally, the NCAA notes
that, although the litigation ended with a default judgment,
it involved “preparing two motions for preliminary
injunction (both solely due to Defendants' intent to
infringe on the NCAA's intellectual property rights), a
motion for entry of default, a motion for entry of default
judgment, and a motion for permanent injunction. The NCAA
also had to oppose (successfully) Defendants' motion to
dismiss and motion for evidentiary hearing, both of which
were needlessly filed after entry of default.”
[Filing No. 94 at 8.]

In
their response, Defendants argue that the attorneys' fees
the NCAA seeks are unreasonable. First, they argue that the
NCAA provided an estimate of its attorneys' fees for
settlement purposes in January 2018 of $195, 000, and that
“23 days later, …the total amount of the
NCAA's fee request increased by nearly 25%, to $242,
213.55….” [Filing No. 98 at 6-7.]
Second, Defendants assert that the NCAA's counsel's
invoices reflect duplicative, excessive, and/or unnecessary
time entries, including: (1) work on the NCAA's
opposition to Defendants' Motion to Dismiss; (2)
excessive time spent on research; (3) vague time entries; (4)
preparation of never-filed motions for default judgment and a
second motion for preliminary injunction; (5) time spent
communicating between professionals; (6) time reflecting one
attorney or paralegal's review of another attorney or
paralegal's work; and (7) time reflecting administrative
and/or secretarial work. [Filing No. 98 at 7-12.]
Third, Defendants contend that the NCAA's fee request is
“improperly based on higher rates from distant
markets.” [Filing No. 98 at 13-15.] Defendants
request that the NCAA's Motion for Attorneys' Fees be
denied in its entirety or, in the alternative, that it be
reduced by $47, 213.55 (the difference between the amount
requested and the amount provided as an estimate in January
2018); that all administrative and secretarial tasks be
removed from the bill; that all time spent on briefs that
were never filed be stricken; that a negotiated rate of
$234/hour be applied to all counsel; that all time spent
between communicating professionals be reduced by 75%; and
that “the remaining amount be reduced by at least 50%
to reflect duplicative and excessive time.” [Filing
No. 98 at 16.]

In its
reply, the NCAA argues that the attorneys' rates
represent the actual market rate for each attorney, and that
the Court should “conclude that counsel's decisions
on how to spend time litigating a matter were reasonable in
the absence of particularized evidence to the
contrary.” [Filing No. 99 at 5.] The NCAA also
contends that the amount of time spent is reasonable if the
client paid for them, and that it has paid the invoices.
[Filing No. 99 at 5.] The NCAA argues further that
it should not be penalized for using its longtime counsel to
continue litigating against Kizzang, and that the
attorneys' hourly rates should not be adjusted to reflect
the Indianapolis market. [Filing No. 99 at 6-7.] The
NCAA asserts that many of the tasks that Defendants object to
were necessitated by Defendants' litigation tactics -
including filing a Motion to Dismiss while the NCAA's
Motion for Clerk's Entry of Default was pending.
[Filing No. 99 at 8-9.] It notes that
Defendants' Motion to Dismiss involved many different
issues which required legal research, and that the only
unfiled motion for which the NCAA seeks fees is the
NCAA's second Motion for Preliminary Injunction, which
had to be prepared because Defendants would not agree to
extend the stipulated preliminary injunction. [Filing No.
99 at 10.] Finally, the NCAA argues that the estimate of
attorneys' fees it provided in January 2018 is not
binding. [Filing No. 99 at 11.]

The
Court will address in turn the three main issues that
Defendants raise in connection with the NCAA's Motion for
Attorneys' Fees - the discrepancy between estimated fees
and actual fees sought; the amount of hours spent (and the
contentions that work was duplicative, excessive, and/or
unnecessary); and the hourly billable rates. The Court notes
at the outset that Defendants do not contest the time spent
by the NCAA's local counsel, Faegre Baker Daniels LLP
(“Faegre”), focusing only on time spent
by attorneys and paralegals at Loeb & Loeb LLP
(“Loeb”) and on the hourly rates of
attorneys and paralegals at Loeb and, to some extent, Faegre.
The Court will consider Defendants' arguments
accordingly.

A.
Discrepancy Between Fee Estimate and Fees Ultimately
Sought

Defendants
point to emails between their counsel and the NCAA's
counsel in January 2018 which related to the possibility of
settling the attorneys' fee issue. The string of emails
began with Defendants' counsel stating “just so I
am clear, what is the exact amount of attorneys' fees
that NCAA plans to claim for reimbursement? Also, please send
us your itemized bills reflecting the total so that we can
use that information to have a substantive discussion with
our client before the next conference with the court on
2/2.” [Filing No. 98-1 at 4.] Counsel for the
NCAA responded:

[W]e are not going to send the bills before you are able to
report back to the Court the extent of your client's
willingness to entertain a stipulation of a substantial
amount of attorneys' fees. We understand that the
stipulated amount [would] be subject to review of rates and
hours, but the Court was clear that before undertaking the
process of such review Defendants need to express their
position on our proposal to seek such a stipulation in lieu
of a motion. Based on prior positions your clients have
taken, we are skeptical that such a negotiation would be
productive and are disinclined to do it without some
assurance to the contrary.

[Filing No. 98-1 at 3-4.]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Defendants&#39;
counsel responded that they could not &ldquo;even
meaningfully consider a stipulation unless we know the total
amount of attorneys&#39; fees, as well as the corresponding
number of hours and your rates. Are you going to provide
those figures? It not, then what, exactly, are you asking our
clients to stipulate to?&rdquo; [Filing No. 98-1 at
3.] Counsel for the NCAA responded “I mentioned
the amount on the call - about $195, 000. If you can't
meaningfully consider the stipulation under the circumstances
that probably tells us what we need to know. You ...

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